Legal & General cuts endowment payouts by up to 9.5%

19 February 2009 / by Rebecca Sargent
Legal & General has today announced that it will be cutting final bonus rates on most of its With Profits policies.

Policies including mortgage endowments, saving endowments and pensions will be affected by the measures that have been taken due to the continuing of difficult conditions.

In fact, those who were 29 at entry, paying £50 a month into a 25 year Legal & General endowment mortgage, will find that on March 1 2009 the returns on their policy will be down by 9.5 per cent for the year, from £39,613 on March 1 2008 to £36,414.

Those with a 20 year With Profits Legal & General pension policy will also see as much as 8.7 per cent shaved off the value following the announcement.

The cuts are, according to Legal & General, part of a process called smoothing, which means that investors continue to benefit to some extent despite worsening market conditions.

Commenting, finance director of Legal & General's With Profits business, Carl Dowthwaite, said: "With Profits continues to provide attractive long term returns and has given customers genuine protection from market volatility.

"In current market conditions the core features of With Profits mean that it remains a good choice for investors. Our investment strategy puts us in a strong position to benefit from market recovery."

Shares in Legal & General fell by as much as 30 per cent earlier this week, amid fears over its capital reserves.

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